Under the deal, Didi will take over Uber China’s operations, brand and data while Uber and its local partners will get shares equivalent to 20 percent of Didi.
The founders of the two companies – Uber CEO Travis Kalanick and Didi Chief Executive Cheng Wei – will also have seats on each other’s boards, according to Bloomberg.
To ensure stability and continuity of service, the agreement allows Uber China to maintain independent branding and business operations while Didi will combine the two teams’ managerial and technological experience and expertise.
The agreement said Didi will also help establish a healthy environment that supports China’s mobile Internet industry and maintain working relationship with its overseas partners to come up with the best cross-border ridesharing experience.
#startup Uber gives up the fight in China and merges with archrival Didi Chuxing,… #uber pic.twitter.com/JZoYXjbUIW
— startupcrunch (@startupcrunch) August 1, 2016
“Didi Chuxing and Uber have learned a great deal from each other over the past two years,” said Cheng.
“This agreement with Uber will set the mobile transportation industry on a healthier, more sustainable path of growth at a higher level.”
This development put an end to the intense battle between the two firms for supremacy in the world’s largest ride-hailing market. Uber has been spending at least $1 billion a year after launching operations in China two years ago, while Didi also spent billions on subsidies to its drivers and riders.
Massive business deal as #Uber calls it quits in China and merges with Chinese ride sharing service #DidiChuxing August 1, 2016
In a statement posted on Uber’s website, Kalanick said Uber China, which is now carrying out more than 150 million trips a month, has grown very fast over the past two years and its success has exceeded even his “wildest dreams.”
Uber China’s accomplishment, Kalanick said, was no small feat considering that most American technology firms “struggle to crack the code there.”
“Uber and Didi Chuxing are investing billions of dollars in China and both companies have yet to turn a profit there. Getting to profitability is the only way to build a sustainable business that can best serve Chinese riders, drivers and cities over the long term,” Kalanick said of the merger.
“I have no doubt that Uber China and Didi Chuxing will be stronger together. That’s why I’m so excited about our future, both in China—a country which has been incredibly open to innovation in our industry—and the rest of the world, where ridesharing is increasingly becoming a credible alternative to car ownership,” he added.
Claiming nearly 90 percent of China’s market, Didi joined forces with Kuaidi last year as the competition with Uber intensified and secured support from Internet companies such as Alibaba Group Holding Ltd. and Tencent Holdings Ltd.
In May, Apple Inc. made a $1 billion investment in Didi in what analysts see as a serious blow to Uber China’s operations.
Apple Chief Executive Tim Cook said the investment will help them better understand one of the world’s largest markets, as he sees more opportunities for Apple, which is hoping to invigorate its sales in China, to collaborate with Didi in the future.
“We are making the investment for a number of strategic reasons, including a chance to learn more about certain segments of the China market,” he said. “Of course, we believe it will deliver a strong return for our invested capital over time as well.”
